Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–1

CHAPTER 4

SOCIAL RESPONSIBILITY & ETHICS IN MANAGEMENT

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–2

LECTURE OUTLINE

• Organisational social responsibility

• Organisational social responsiveness

• Managing an ethical organisation

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–3

MANAGERIAL ETHICS

• Ethics Standards of behaviour and moral

judgment differentiating right from wrong

• Managerial ethics

Standards of conduct and moral judgment mangers use in their business

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–4

ORGANISATIONAL SOCIAL RESPONSIBILITY

‘The obligation of an organisation to seek actions protecting and improving society’s welfare along with its own interests.’

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–5

ORGANISATIONAL SOCIAL RESPONSIBILITY

Major viewpoints:• Invisible hand

• Hand of government

• Hand of management

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–6

ORGANISATIONAL SOCIAL RESPONSIBILITY

INVISIBLE HAND ARGUMENT• A view holding that the entire social responsibility

of a corporation can be summed up as ‘make profits and obey the law’.

• Corporate responsibility is guided by the ‘invisible hand’ of free market forces

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–7

ORGANISATIONAL SOCIAL RESPONSIBILITY

HAND OF GOVERNMENT ARGUMENT• A view holding that the interests of society are best

served by having the law and political process guide the corporation’s activities.

• Law and political process controls corporation re: employee well-being, customer protection and community issues e.g. environment.

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–8

ORGANISATIONAL SOCIAL RESPONSIBILITY

Hand of Management argument

Incorporates:• Anti-freeloader argument• Capacity argument• Enlightened self-interest argument

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ORGANISATIONAL SOCIAL RESPONSIBILITY

HAND OF MANAGEMENT ARGUMENT

• A view stating that corporations and their managers are expected to act in ways that protect and improve society’s welfare as well as make profit.

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ORGANISATIONAL SOCIAL RESPONSIBILITY

ANTI-FREELOADER ARGUMENT• Holds that since businesses benefit from a

better society, they should bear part of the costs by actively working to bring about solutions to social problems.

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ORGANISATIONAL SOCIAL RESPONSIBILITY

CAPACITY ARGUMENT• States that the private sector,

because of its considerable economic resources, must make up for government cutbacks in social programs.

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ORGANISATIONAL SOCIAL RESPONSIBILITY

ENLIGHTENED SELF-INTEREST

ARGUMENT• Holds that businesses exist at society’s

pleasure and that, for their own legitimacy and survival, businesses should meet the public’s expectations regarding social responsibility.

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SOCIAL RESPONSIBILITIES OF MANAGERS

• Economic and legalResponsibility to make a profit and obey the law

(recognised by: invisible hand, hand of government, hand of management).

• Ethical and discretionaryEthical behaviour expected by society (recognised by: hand of management).

Difficult to determine, identify

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SOCIAL STAKEHOLDERS

• Shareholders• Employees• Customers• Local community• Society

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SOCIAL STAKEHOLDERS

Employees

Local community

Shareholders

Society (regional & national)

Customers

International community

THEORGANISATION

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SOCIAL STAKEHOLDERS

DIVERSITY AS COMPETITIVE ADVANTAGE• Attracting workers is costly, diversity may

help attract and retain workers• Workforce that reflects customer base may

give insight into customer wants, needs, preferences

• Innovations are more likely where diversity exists

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DOES SOCIAL RESPONSIBILITY PAY?• Evidence is mixed

• Strategically beneficial

• Likely, profit socially responsible management

• Shareholders are sensitive to the extent that it affects profit

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ORGANISATIONAL SOCIAL RESPONSIVENESS ‘A term referring to the development of

organisational decision processes where managers anticipate, respond to and manage areas of social responsibility.’

Two aspects:• Monitoring social demands and expectations

• Internal social response mechanisms

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MONITORING SOCIAL DEMANDS/EXPECTATIONS• Social forecasting

• Opinion surveys

• Social audits

• Issues management

• Social scanning

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INTERNAL SOCIAL RESPONSE MECHANISMS• Individual executives

• Temporary task forces

• Permanent committees

• Permanent departments

• Combination approaches

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BEING AN ETHICAL MANAGER

The difficulties and concerns with business ethics raise three important issues about being a manager:

• Types of managerial ethics

• Ethical guidelines for managers

• Ethical career issues

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TYPES OF MANAGERIAL ETHICS• Immoral management

Lacks ethical principles, concern for profit only

• Amoral managementIgnores, or oblivious to, ethical issues

• Moral managementConscious attention to ethical standards and issues

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ETHICAL GUIDELINES FOR MANAGERS

• Obey the law.• Tell the truth.• Show respect for people.• Stick to the Golden Rule.• Above all, do no harm.• Participation not paternalism.• Responsibility requires action.

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ETHICAL CAREER ISSUES• Assessing values and protecting yourself

– Seek advice and support from trusted sources.

– Take action to change what you see as not being ethical.

– Take actions to protect yourself.

• Anticipating ethical conflicts– Pre-employment checks: Is this an ethical

company?– Is the industry marked by patterns of

unethical behaviour?– Avoid ethical compromises.

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MANAGING AN ETHICAL ORGANISATION

Situational factors influencing ethical behaviour:

• External factors

Competitiveness, high/low opportunities for success, dependency on other organisations

• Internal factors

Push for high performance, labour unrest, delegation, quests for innovation

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MECHANISMS FOR ETHICAL MANAGEMENT• Increasing awareness of diversity• Top management commitment• Codes of ethics• Ethics committees• Ethics audits• Ethics hotlines• Ethics training

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LECTURE SUMMARY

• Organisational social responsibility– Major perspectives: invisible hand, hands of

government and management– Social responsibilities of managers– Social stakeholders: shareholders, employees,

customers, local and international community, society

– Does social responsibility pay? Evidence mixed

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LECTURE SUMMARY

• Organisational social responsiveness– Monitoring social demands and

expectations: forecasting, opinion surveys, social audits, issues management, social scanning, internal social response mechanisms

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 4–29

LECTURE SUMMARY

• Being an ethical manager– Types of managerial ethics: immoral, amoral,

moral– Ethical guidelines for managers– Ethical career issues: assessing & anticipating

ethical conflicts

• Managing an ethical organisation– Situational factors influencing ethical

behaviour; external and internal– Mechanisms for ethical behaviour